Dubai: As another quarter goes by, it seems there is no stopping the downward trend in sales transactions and values that has taken hold of the Dubai property market.
At this rate — and without something happening suddenly to turn things around — home prices in Dubai could continue to drop all through next year, according to projections put out by the consultancy JLL, with the next ‘growth cycle’ being pushed further down the line to the period just before Dubai’s Expo 2020.
Apartment prices in the third quarter dropped 3 per cent compared to the second quarter but for tenants there is little to cheer about as rental values fell 1 per cent quarter-on-quarter, JLL estimates show.
Meanwhile, on a year-on-year basis, in the 12 months leading up to end September, residential values are down 11 per cent — something that confirms Dubai now is very much a buyer’s market.
Still, not enough people are buying right now.
“It is noteworthy the overall decline is continuing with the [second quarter of 2015] representing the lowest level for both sales [at 4,000 transactions] and values [at Dh5.9 billion] since mid-2011,” Craig Plumb, head of research at JLL’s regional office.
“Data from Dubai Land Department show sales volumes peaked in 2013 [33,800 transactions excluding land] and fell back significantly by around 30 per cent in 2014 [to 23,800 transactions]. Values followed a similar pattern, peaking in 2013 and declining by 22 per cent in 2014.”
Making matters worse is the fact that prospective buyers keep biding their time.
“This is the stage where any buyer knows you can get the best bargains. There’s no rush to buy today because many believe they could get even better deals later on,” said Juwaad Beg, CEO of Al Madina Al Raeda Real Estate.
“However, while transaction levels are way down, conversion rates are still healthy at the luxury end. Where there used to be 10 enquiries before and two people buying, these days you still do get the two transactions even if the number of enquiries are less than five.”
However, action is seen firming in the mid-tier segment, with The Villages and Jebel Ali Gardens — projects being developed by Dubai South and Nakheel, respectively — seen as likely beneficiaries.
“I have seen few large advertisement banners for this project [The Villages] across Dubai,” Adam Price, managing director for the Middle East at Select Property Dubai.
“I would predict prices will probably be around Dh1,000 a square foot for prime projects offering a good quality of finish,” he added.
“We are seeing an increase in the number of mid-level investors,” Price said. “Typically, demand from this segment appears to be in areas such as Jumeirah Village Circle and more specifically the Al Barsha South region which offers a better value for money.”
